Dalian iron ore hits 5-week peak on Chinese demand – Markets
MANILA: Iron ore extended its rally for a fourth straight session on Wednesday, with Dalian’s benchmark index hitting a five-week high as traders clung to hopes that the major producer’s recent political actions Chinese steel would stimulate demand for raw materials.
Benchmarks for steel grades and other steel inputs in China also rose as overall sentiment remained upbeat despite data showing new home prices fell at their fastest pace since 2015 in October.
The most traded iron ore in January on China’s Dalian Commodity Exchange ended the morning up 2.4% at 736 yuan a ton. Earlier in the session, it hit 736.50 yuan, its highest level since Oct. 11.
“Short-term (trading) is dominated by emotions,” analysts at Sinosteel Futures said in a note. The general mood turned positive after a market rout in October, with gains accelerating after China announced on Friday that it was relaxing some of its strict Covid-19 rules despite the current spike in infections. News over the weekend about a bailout for struggling Chinese property developers added to optimistic sentiment, with traders ignoring October economic indicators pointing to a slowdown in the world’s second-largest economy due to Covid-19 restrictions and the slowdown in the real estate sector. On the Singapore Stock Exchange, the December iron ore benchmark rose 5.2% to $99.60 a tonne, its highest level since Sept. 16.
The reality on the ground is not inspiring, however, as steel mills cut production amid weak demand and brace for winter production restrictions.